Open your doors and look what comes in...

[d's insurance store]

Well, at least for me, my search engine optimization is working...last week an unsolicited quote request arrived via email. The initial message asked for a quote for liability coverage for 'products manufactured in the home, to sell at farmer's markets and events, need to easily add additional insureds as events come up.'

OK, I took this to mean GL + Products liability, right? Not that difficult to do...I've got surplus lines markets that do this sort of thing...so I return the email by saying that in order to submit a proper quote, I will need a few minutes to chat and getting a quote is likely to feel intrusive to the business owner who's never gone through the process, but I will need details about the business and also some idea of what goes into the home manufactured products because that's what a company will base its rate on. Oh, and I also gave a broad price range of a few thousand dollars per year so that it doesn't come as sticker shock to the uninitiated.

Well, back comes an email saying that she is 'shocked' at the proposed pricing and that she's coming out of an RLI home business policy that has a cap of $5000 per year in gross revenue and she plowed through that in her first 3 months, and that she is making organic cosmetic products and selling them at farmer's market type venues and her RLI policy was only $250 per year and how can I stay in business ripping people off, and so on and so on....(you guys saw this coming, right?)

So, I chuckle, shrug my shoulders, and send a reply stating that the RLI type policy, or any farmer's market vendor policy is likely to only include GL and product liability is most likely not covered, and if indeed a limited GL policy was her goal, it could best be served by perhaps her personal lines agent, and she should just be aware of the risk of not covering products and completed operations.


After the interaction was done, I couldn't help but think what would happen to this person should sombody buy and use her product (perhaps made in the kitchen) and develop a skin rash, or worse and then ask for compensation, or medical expenses or hire an attorney...that would be the end of the business, and likely whatever lifestyle this vendor had risen to. And of course, imagine her surprise and outrage when the GL carrier denied coverage...after all, isn't 'liability' just for this kind of happening? And finally the agent who either did not, or could not explain the difference in coverage between GL and Products and Completed Ops.

I completely understand the hesitation of someone grossing $30K per year not wanting to spend $4000 on insurance, but holly cow, this is just a claim and disaster waiting to happen. All it will take is one person having a skin sensitivity to whatever is in the concoction.

I'm glad I could be a part of the education process.

[SFOInsuranceLady]

Wow, D! Been there....done that....SO many times! Looks like she JUST found out that Products/Completed Ops. were not inlcuded in her policy. Probably because she needed a COI for one of these events and the Cert. Holder actually read the coverages, noting that Products/Completed Ops were "not covered".

Also, a red flag automatically goes up when you have a manufacturer using their "own kitchen"......scary!

[Duke]

But, to be fair, d's insurance store, you don't know whether or not Products/Completed Operations is included or excluded from that policy. At least, you didn't reveal any specific knowledge in your post. Granted, it's a cheap price, but we've all seen insurance products underpriced. I think I'd refrain from criticism of somebody's coverage based on speculation.

[e-bit]

I see this stuff ALL THE TIME. I review someone's policies, point out all the things they aren't covered for that they think they're covered for, how they're lowballed with the receipts 1/4 what they should be and policy is subject to audit, they're in an E&S market when they can be in a standard program - and if it ends up even costing 1 penny more they don't want it. Sigh.

[bclawhorn]

D, I feel your pain! I had a similar situation with a potential client a few years ago that manufactured & distributed beauty products that was located on the West Coast. Their products were manufactured in China and imported to the US for sale. They were trying to finalize a contract with a national retail chain to carry & sale their products but they were told that their insurance policy didn't meet their contract requirements.

I reviewed the contract and their current policy. Not only did their current policy not provide products & completed operations coverage, there was no product recall coverage or some other coverages that the contract required. True, it wasn't very expensive but it was perfectly clear that 1: either their agent didn't understand their business and exposures or, 2: all the insured cared about was cost or, 3: all of the above.

I got them a quote that provided all the coverages as required by the contract and also included the product recall coverage. The potential client almost passed out when they saw the cost of the coverage. Given what their exposure was, the quote was not excessive. They decided to shop around for other quotes, which was fine with me. I told them the quote was valid for 30 days and to get back to me if they wanted to bind the quote.

Fast forward about three weeks. Yup, the potential client is back asking me if I would take a look at the quote his current agent got for him. It was from the same carrier that wrote his current policy! The only change was to the named insured. When I asked which was the correct named insured, they said the only on my quote was correct. They didn't seem to understand how important it was to have the correct named insured on the policy, just in case they became involved in a claim.

I thanked the potential client for allowing me to provide them with a quote and closed the file as fast as I could, happy that they would not be adversely affecting my loss ratio!

[chizcurlz]

Search Engine Optimization is really important if you're running a business online since most people are using internet to buy something what they want or to find information through the web. People tend to use Google and other search engines like searching for a brand, a specific product or sometimes they use search terms like "how to", "where to find", "where to buy", and a lot more.